Thinking out of the big box: How big box stores are competing with Amazon

PHOTO: Walmart employee Yurdin Velazquez pushes grocery carts at a Walmart store, Feb. 19, 2015, in Miami, Florida.PlayJoe Raedle/Getty Images
WATCH What traditional retail stores are doing to compete with online retailers

When stores compete for business, at least in the short term, shoppers benefit.

The current battle royal? Amazon versus in-store shopping. This contest has been building for years, and it has reached a tipping point. A chart of Amazon’s sales numbers have skyrocketed over the past few years. The increase in sales has seen malls shuttered, national chains closing stores and stalwarts of retail shaking in their boots.

This level of disruption has prompted two of the biggest names in retail to get very creative with their in-store design, technology and marketing. This affects consumers by providing more convenience, an in-store experience that mimics online shopping while providing new amenities and savings opportunities.

Wal-Mart has test locations around the country, including a store in Texas just outside Houston where I go to try its cashierless checkout and automated store. As I enter, I grab a scanner from a rack by the door. I grab items from the racks and scan them putting them straight into the shopping bags I brought. I can get instant price information. When I hit the checkout, I point my scanner at the kiosk, insert my credit card, and 32 seconds after rolling up, I am checked out and on my way. Considering that a normal checkout with a cashier takes me five to seven minutes, this is a time savings.

There are other modernized aspects of shopping at this Wal-Mart: no fast food here, instead a healthy and modern Chobani Cafe that feels so un-Wal-Mart-like, it’s almost jarring. There is also a lot of technology: an automated fabric cutter, deli orders placed by tablet and huge touchscreen monitors at the end of some aisles where shoppers can search Walmart.com for items they weren’t able to find in the store.

Wal-Mart spokeswoman Anne Hatfield says the company doesn’t see these automation features leading to a reduction in its workforce. Instead, she says it is employing people in other store areas as it adds amenities.

For example Wal-Mart and Target have tested drive-up service for online orders. I place an order on my phone from Walmart.com, just two hours later, I receive a notification that it’s ready for pickup. At this Wal-Mart test facility that offers the service, I pull up to a kiosk outside and without ever getting out of the car, I use a touchscreen to find my order, I pull forward into the delivery bay, and a Wal-Mart employee loads the items into my car. I would have loved this when my kids still napped in the car or if I had mobility issues. Wal-Mart’s Anne Hatfield says, “We see most pickups at night. People order their groceries online and drive through to pick them up on the way home.” Wal-Mart touts the speed of this shopping method; to compete with Amazon’s one-day delivery, it says picking up at a nearby store on the same day is more convenient for many shoppers.

Wal-Mart is so convinced about this order online and pick-up in-store model that it is incentivizing customers with discounts. On the company’s blog, e-commerce CEO Marc Lore says, “The pickup discount will initially be available on about 10,000 items. We will then roll out the discount to more than one million of the most popular items by the end of June.” The chain calls out a $50 discount on an HD TV and an $8 discount on a car seat. Not to be outdone, Amazon countered by lowering the minimum purchase threshold for free shipping from $35 to $25. While these may not seem like Black Friday discounts, it’s a savings arms race worth watching. As retailers get more creative and aggressive, they will be fighting with discounts to get your business.

Target has a different approach, it is creating a test store, also in Houston, with two entrances. One focuses on speed and convenience; the chain’s most purchased items are stocked up close to the entrance, and grab-and-go food options are available too. The other entrance leads to a more traditional Target browsing experience.

And it’s not just superstores fighting back: Fashion brands are looking at technologies that bring online shopping features into the dressing rooms and makeup counters. The Oak Lab's Oak Mirror senses the items you take into the dressing room and lets you see other color and sizing options available in the store. It has an option for requesting a sales associate bring them to you so you never have to leave the dressing room. If the items you want are not available in the store, you can use Apple Pay on your phone to buy the items via the mirror and have them sent to your house.

The MemoMi Memory Mirror provides an augmented reality experience for trying on makeup in stores. If you want to see which shade of lipstick looks best, look into the mirror and select as bold or subtle a shade as you want. Again, if the makeup counter doesn’t stock the shade you want, you can order it online and have it in a few days.

The future of retail is changing, and at least for now, savvy shoppers will benefit.

Comments